Softlogic 3Q net up 90% over retail, healthcare & financial services performance

The diversified retailer, Softlogic Holdings PLC group (SHL) increased its net profit by as much as 90.4 percent to Rs.341.1 million for the quarter ended December 31, 2015 (3Q16) from a year ago supported by its retail, financial services and healthcare services segments, the interim results showed. 

The earnings per share (EPS) for the quarter rose to 44 cents from 23 cents a year ago. 

The group top line rose 44 percent year-on-year (yoy) to Rs.16 billion while the cost of sales rose 55 percent yoy to Rs.11 billion. The gross profit for the group was Rs.4.9 billion, up 24 percent from a 
year ago. 

The group’s earnings before interest tax depreciation and amortization (EBITDA) for the quarter rose 17.3 percent yoy to Rs.2.3 billion.  

The performance reflects the favourable market conditions which bode well for the group’s businesses to show better results.   

This is demonstrated by the group’s retail segment which nearly doubled its bottom line to Rs.235.2 million during the quarter. The segment revenue rose 23 percent yoy to Rs.5.3 billion. This is one-third of the group revenue.   

“Acquisition of Odel has had significant synergistic effects. Increasing footfall is evident across our retail stores while brand acquisition and store expansions also supported this growth momentum,” Softlogic group Chairman Ashok Pathirage said. 

He said Burger King is now financially breaking even.

The group’s healthcare services segment recorded a net profit of Rs.654.9 million, up 126 percent from a year ago. The top line rose 18 percent yoy to Rs.2.6 billion. The sector comprises of three hospitals—The Central, Asiri Surgical and Asiri Hospital Holdings.

Asiri Hospital, Kandy, face-lift of Asiri Hospital Holdings in Kirula Road and the state-on-the-art laboratory building adjacent to the hospital are due to open in May 2016, Pathirage added. 

In order to reduce the group exposure to foreign exchange risk, Asiri Hospitals Holdings in January 2016 fully settled the remainder of US $ 12.9 million of US $ 20 million loan obtained from the International Finance Corporation (IFC). 

The group’s financial services sector bottom line rose by as much as 118 percent yoy to Rs.628.8 million. The segmental top line rose 33.3 percent yoy to Rs.2.4 billion. 

The segment comprises of Asian Alliance Insurance PLC, Softlogic Finance PLC and Softlogic stockbrokers of which the performance was hampered due to unfavorable trading conditions in the CSE. Meanwhile, the information technology segment saw its after tax profit contracting 31 percent yoy to Rs.27.1 million. However the segmental revenue rose by as much as 111 percent yoy to Rs.4.99 billion. 

The Samsung operations alone earned a revenue of Rs.7 billion for the nine months ended December 31, 2015 from the total revenue of Rs.12.5 billion. 

The automobile segment its after tax losses widening 32 percent yoy to Rs.69.1 million but the top line rose 52 percent yoy to Rs.433.3 million mainly due to the growing demand for its King Long bus range.  

The main customers of these buses are the tourist and highway operators. 

The group’s leisure sector saw widening of its net losses 35 percent yoy to Rs.76.9 million. The revenues rose 21 percent to Rs.233.4 million. 

While existing performance is a reflection of the group’s Ceysand Resort, the Softlogic expects a significant upside in the sector earnings following the opening of its city hotel mid 2016. 

Meanwhile for the nine months ended December 31, 2015, the group posted a net profit of 540.8 million (EPS of 70 cents), up 68 percent over the corresponding year.  

The group top line rose 52 percent yoy to Rs.42.1 billion and the cost of sales rose 61 percent yoy to Rs.28.5 billion. The gross profit was 13.6 billion, up 36 percent yoy. 

Operating expenses rose 26 percent yoy to Rs.9.6 billion while the operating cost margin declined to 22.8 percent from 27.6 percent a year ago, the company said. 

Meanwhile, the group finance cost rose 15 percent yoy to Rs.2.4 billion while the finance income declined by 12 percent yoy to Rs.860.6 million. 

As of end December, Pathirage held 41.64 percent stake in the group being the single largest shareholder while the state-controlled private sector pension fund, Employees’ Provident Fund held 0.93 percent stake being the seventh largest shareholder.